I have a loss. I don't need to file a tax return

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A recent TaxQuips question was from someone whose Supplemental Security Income checks were about to be levied by IRS because he had not bothered to file tax returns for 2006 and 2007 - http://www.taxquips.com/index.php?id=1306 .

Two tax professionals start the discussion about the need to file tax returns - and adds some tips. Terrific!

Seeing all this, and hearing about Eunice Shriver's death, reminds me of story. A lovely young woman, a member of the Kennedy clan, comes into my office one day in tears. She hands me some IRS notices demanding nearly $200,000 from her in taxes, penalties and interest for a year when she had not filed a tax return. She wails, "I can't afford to pay this much money. What do I do?"

Digging through the pile of correspondence from IRS, many of which had never been opened, I finally the original request to file the tax return. (No, not a CP-2000 notice. Those come after you file a tax return.)

It seems, in that year, her broker reported about $300,000 worth of securities sales. I got her calmed down and we called up her broker and asked for a report showing the basis of the stocks sold. It arrived a couple of days later - and I prepared the tax return. It showed capital losses well in excess of $30,000.

I also got a power of attorney and requested copies of all the 3rd party filings (W-2s, 1099s, etc.) to ensure we reported everything IRS had on record.

Source: www.accountingweb.com

Category: Taxes

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